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On the Optimality of a Minimum Wage: New Insights from Optimal Tax Theory

Lehmann, Etienne; Hungerbühler, Mathias - Institute for the Study of Labor (IZA) - 2007

We build a theoretical model to study whether a minimum wage can be welfare-improving if it is implemented in conjunction with an optimized nonlinear income tax. We consider this issue in a framework where search frictions on the labor market generate unemployment. Workers differ in...

Persistent link: https://www.econbiz.de/10005762415

Tax-Benefit Revealed Redistributive Preferences Over Time: Ireland 1987-2005

Bargain, Olivier; Keane, Claire - Institute for the Study of Labor (IZA) - 2010

By inverting Saez (2002)'s model of optimal income taxation, we characterize the redistributive preferences of the Irish government between 1987 and 2005. The (marginal) social welfare function revealed by this approach is consistently comparable over time and show great stability despite...

Persistent link: https://www.econbiz.de/10008682243

Migration Elasticities, Fiscal Federalism and the Ability of States to Redistribute Income

Giertz, Seth H.; Tosun, Mehmet S. - Institute for the Study of Labor (IZA) - 2012

This paper develops a simulation model in order to examine the effectiveness of state attempts at redistribution under …-level redistribution are substantial, but state action may still be preferred to a federal policy that is at odds with preferences of a … state pursuing additional redistribution, but not a cost at the national level. …

Persistent link: https://www.econbiz.de/10011163486

Behavioral Responses to Taxation: Cigarette Taxes and Food Stamp Take-Up

Rozema, Kyle; Ziebarth, Nicolas R. - Institute for the Study of Labor (IZA) - 2015

This paper investigates a previously unexplored behavioral response to taxation: whether smokers compensate for higher cigarette taxes by enrolling in food stamps. First, we show theoretically that increases in cigarette taxes can induce food stamp take-up of non-enrolled, eligible smoking...

Persistent link: https://www.econbiz.de/10011210820

Shifting Taxes from Labor to Consumption: Efficient, but Regressive?

Pestel, Nico; Sommer, Eric - Institute for the Study of Labor (IZA) - 2013

Shifting taxes from labor income to consumption is regularly suggested as a measure to induce work incentives. We investigate the effect of increases in the Value Added Tax on labor supply and the income distribution in Germany, which is compensated by a revenue-neutral reduction in...

Persistent link: https://www.econbiz.de/10011212759

Anatomy of Policy Complementarities

Orszag, J. Michael; Snower, Dennis J. - Institute for the Study of Labor (IZA) - 1999

The analysis provides a new explanation for two widespread problems concerning European unemployment policy: the disappointingly small effect of many past reform measures on unemployment, and the political difficulties in implementing more extensive reform programs. We argue that the heart of...

Persistent link: https://www.econbiz.de/10005763705

Optimal Redistributive Taxation with both Extensive and Intensive Responses

Jacquet, Laurence; Lehmann, Etienne; Van der Linden, Bruno - Institute for the Study of Labor (IZA) - 2010

This paper characterizes optimal income taxation when individuals respond along both the intensive and extensive margins. Individuals are heterogeneous across two dimensions: specifically, their skill and disutility of participation. Preferences over consumption and work effort can differ with...

Persistent link: https://www.econbiz.de/10008557228

A Simple Theory of Optimal Redistributive Taxation with Equilibrium Unemployment

Hungerbühler, Mathias; Lehmann, Etienne; Parmentier, Alexis - Institute for the Study of Labor (IZA) - 2010

We propose a canonical model of optimal nonlinear redistributive taxation with matching unemployment. In our model, agents are endowed with different skill levels and labor markets are perfectly segmented by skill. The government only observes negotiated wages. More progressive taxation leads to...

Persistent link: https://www.econbiz.de/10008557234

Union Strategy and Optimal Income Taxation

Kessing, Sebastian G.; Konrad, Kai A. - Institute for the Study of Labor (IZA) - 2005

taxation in the tradition of Mirrlees (1971). Our results also apply to non-welfarist states which have income redistribution …

Persistent link: https://www.econbiz.de/10005762005

Globalization and Human Capital Formation

Andersson, Fredrik; A. Konrad, Kai - Institute for the Study of Labor (IZA) - 2001

This paper compares education investment in closed and open economies without government and with a benevolent government. The fact that the time consistency problem in taxation can make labor mobility beneficial even if governments are fully benevolent - which is known from other contexts - is...

Persistent link: https://www.econbiz.de/10005762254